Auto parts smaller than a postage stamp are creating big conversations in Michigan.
U.S. Sen. Gary Peters brought the national conversation around American production of semiconductors home to Michigan at a field hearing in Detroit.
Peters, who chairs the Commerce Subcommittee on Surface Transportation, Maritime, Freight and Ports, led the hearing on auto innovation among union, economic and technology leaders in the state.
While Peters spoke to the innovations of electrification, autonomous vehicles and improved vehicle safety, the reshoring of semiconductor production was paramount.
“Our supply chains are efficient, but they are not resilient,” Peters said. “When something goes wrong, problems pile up very quickly. Depriving Americans of the things that they rely on it which also contributes to rising inflation. And much of this is due to the fact that we’re too reliant on overseas production.”
The vast majority of global chip production is in East Asia. In 1990, the U.S. had 37% of the global chip manufacturing share. Today that number has dropped to 12%, according to the 2021 Semiconductor Industry Association (SIA) report.
The semiconductor chip shortage halted Michigan’s auto industry leaving General Motors, Ford and Stellantis plants idling and incomplete cars stuck on the lot. In Michigan alone, the number of unrecoverable vehicles is approaching 300,000.
Bringing an automaker perspective, Steve Dawes, Director of UAW Region1D, told the committee the General Motors workers he’s with in Flint take immense pride in manufacturing cars for the world and having production pause due to lack of parts had a “devastating effect” on workers.
“It has had a huge effect, especially when you can relate it to something that’s in our grasp,” he said. “Something that we could be doing, something that we could be building right here in the United States.”
Last month, The House of Representatives passed CHIPS Act investments totaling $52 billion as part of the America COMPETES Act. The Senate passed the same level of funding for the CHIPS Act as part of its version of competitiveness legislation in 2021. There are difference between the two bills that still need to be discussed and ironed out between the two legislative bodies.
Biden referenced the bills in his State of the Union speech and addressed Congress directly saying: “Send it to my desk. I’ll sign it.”
Intel announced a planned “megafab” semiconductor plant just outside of Columbus, Ohio. The $100 billion investment already has expansion plans built in but the speed of the investment is dependent on governmental subsidies. Peters introduced an additional bill to the Senate that gives incentives to boost domestic semiconductor manufacturing.
Peters asked Dawes what the CHIPS investment meant to workers on the line as the industry shifts and changes into something new. Dawes said it gives workers a renewed sense of faith that they are trusted to bring America into the next chapter of automotive history.
Dawes said the role of the government needs to be to educate and bring in auto workers so that they can embrace their changing role.
“[The investment says] ‘We’re counting on you America. We’re counting on the men and women of this proud, great country. We’re willing to show you and give you the tools for your tool box,’” Dawes said.
Included in the subcommittee hearing was Jay Rathert, Senior Director of Strategic Partnerships at KLA Corporation. The Silicon Valley-based semiconductor company chose Ann Arbor as its location for its second headquarters and new research and development center.
Rathert said the company chose Michigan because of its international access, cost savings and talent pool coming from University of Michigan.
“As we went searching, Michiganders had a “can do and how can we help” attitude and we didn’t encounter that everywhere,” he said.
The new KLA site has hired on 400 employees with 200 openings available. The company has invested $195 million so far with an intent to continue growing, Rathert said. He mentioned other emerging tech hubs like Austin and Portland saying that tech tends to “cluster” and when chip companies land in one city or state others follow.
“I think when the secret gets out, maybe more like minded high tech companies will join us,” he said.
As Michigan’s presence as a tech force emerges, the talent pool needs to deepen, said Glenn Stevens, Executive Director of MICHauto and Detroit Regional Chamber’s vice president of automotive and mobility initiatives.
Michiganders need to be brought up to speed on increasing digital skills so that they can both compete in and innovate within the auto industry, he said.
“It’s going to be incumbent upon us to prepare our youth with K through 12 to get the educational attainment and to get the right alignment of skills for the industry demand,” Stevens said. “Whether it be in a labs to fabs a semiconductor plant or a charging network plan or a traditional automotive plant.”
Instead of waiting for Michigan’s population to age into the industry, Stevens pushed for legislation that would welcome international help more immediately. The Fairness for High Skilled Immigrants Act would lift the current per-country cap on work visas.
Michigan consistently ranks among the top 10 states for migrant workers with H-1B work visas, which allow companies to employ foreign workers in specialty jobs that require technical expertise.
The number of H-1B visas issued each year is capped at 65,000, with an additional 20,000 for people with advanced degrees from American universities.
This means America’s one million international students are competing for 65,000 jobs in addition to high skilled workers looking to immigrate. The number of visa petitions for 2022 already hit the cap at the end of February.
Michigan’s auto industry employs over 1.1 million people directly and indirectly in the state and contributes over $300 billion for the state economy. Stevens went on to say that if Michigan wants to remain globally competitive and a national leader then it must prioritize both semiconductor production and the talent behind it.
“Policymakers would therefore be wise not to let the past successive American auto industry lull us into a false sense that we will continue and enjoy success in the future,” Stevens said. “We need our leaders from Capitol Hill to the C suite to the Union, all to come together, champion and enact these type of future oriented legislation.”